Friday, August 19, 2011

9th Circuit Applies Required Records Doctrine to Defeat 5th Amendment Claim for FBAR Recordkeeping (8/19/11)

The Ninth Circuit today issued an opinion applying the required records doctrine to defeat a Fifth Amendment claim related to the FBAR record keeping requirement. M.H. v. United States (In re Grand Jury Investigation M.H.), 648 F.3d 1067 (9th Cir. 2011), here.

Addendum 8/19/11:  Here is the conclusion (p. 20 of the slip opinoin):

Because the records sought through the subpoena fall under the Required Records Doctrine, the Fifth Amendment privilege against self-incrimination is inapplicable, and M.H. may not invoke it to resist compliance with the subpoena’s command. See Doe M.D., 801 F.2d at 1167 (“Records that are required to be maintained by law are outside the scope of the privilege [against self-incrimination].”). Because M.H.’s Fifth Amendment privilege is not implicated, we need not address his request for immunity. Bouknight, 493 U.S. at 562 (declining to “define the precise limitations that may exist upon the State’s ability to use the testimonial aspects of Bouknight’s act of production in subsequent criminal proceedings”).

The district court’s order is AFFIRMED.
Addendum 8/20/11:  JAT comments on the decision:
I write to make some comments. I present these comments in the order they occur to me reading through the opinion. The order thus does not reflect importance.

1. The defendant asserted a Fifth Amendment privilege as to the production of documents. I find it striking, therefore, that the Court of Appeals does not even cite United States v. Hubbell, 530 U.S. 27 (2000), certainly the leading case on the issue. Basically, the Supreme Court said there, synthesizing its earlier holdings, that a witness has Fifth Amendment privilege as to testimony inherent in the act of production. (Hence, the short-hand act of production doctrine.) The witness in this Ninth Circuit case was not asserting a privilege as to the contents of the documents, but a privilege as to the testimony inherent in the act of production. The act of production doctrine would often block compelled production in cases having at least some material criminal risks. However, rather than following the full implications of the act of production -- no compelled production -- Hubbell and other cases have recognized that the concept can be moderated where the existence and witness's possession of the documents is a "foregone conclusion." The notion, such as it is, is that if the Government already knows of the documents' existence and possession by the witness, any testimony in the act of production is at best cumulative. See my prior blog What is the Foregone Conclusion To Overcome the Fifth Amendment Act of Production Doctrine? (7/27/10) here. As I note in that blog, the courts are not uniform as to the articulation of the test of the "foregone conclusion" showing the Government must make in order to overcome the assertion of the Fifth Amendment privilege. In my mind, at least (not necessarily the best barometer of the right answer or the ones the courts will ultimately agree upon), the best test is the United States v. Ponds, 454 F.3d 313 (D.C. Cir. 2006) -- The Government must show the existence and possession of the documents with reasonable particularity. And, my own overlay on that, is that that showing would be basically the showing required to obtain a search warrant. (Keep in mind that that is my own speculation, so take it for what it is worth; of course, if some reader wants me to turn that speculation into advice and pay me well for it (despite my qualifiers that others -- and courts in particular may disagree and reliance on the opinion is at the client's risk), well then it is worth whatever the reader will pay.)

2. Of course, the main focus of attention in the article was another exception to the act of production privilege -- the required records doctrine, but before the Ninth Circuit discussed the required records doctrine, it did throw out some glittering generalities related to the general compelled production law. The Court presented this logical progression (Slip Op. 6-7):
a. a subpoena is generally valid if the Government can show a "'reasonable possibility' that the subpoena will serve the grand jury's legitimate investigative purpose," a showing that is substantially less than "probable cause."
b. The Court acknowledges some limitations on the general subpoena power -- no fishing expedition or harassment via subpoena.
I find it interesting that the court does crisply recognize a fishing expedition exception to the general subpoena power. Hubbell, as readers will recall, was a fishing expedition, but the reason the Court rejected found the subpoena in Hubbell objectionable was not just its fishing expedition nature, but the confluence of the fishing with the act of production doctrine nuance on the Fifth Amendment privilege. But let's not tarry on the Ninth Circuit's glittering generalities about the subpoena because, I suspect, everyone recognized that the subpoena in question here was offensive under the act of production doctrine unless the Required Records Doctrine applied to trump the Fifth Amendment privilege.

3. The Court then, beginning on Slip Op. 7, moves to the Required Records Doctrine analysis. I will leave the readers to study the opinion, but I will state broadly that, in my view, the reasoning is more mechanical than nuanced and that I am left with the concern that the reasoning -- and the holding -- are not persuasive. That is not to say that the holding is necessarily wrong. I am just not persuaded. (I will also offer that opinion, with qualifiers, to anyone willing to pay handsomely for it; but then, of course, they get that free here.) So the balance of the discussion I provide here will deal with just some particular points in the Court's exegesis.

4. The Court says (Slip Op. 9) that Required Records Doctrine applies to displace the Fifth Amendment where the following conditions are met: "(1) the purpose of the government's inquiry is regulatory, not criminal; (2) the information requested is contained in documents of a kind the regulated party customarily keeps; and (3) the records have public aspects." (Readers will recognize those as glittering generalities.) The Government argued that all three conditions need not be met. The Court declined to decide that issue, because it found the presence of each condition.

5. The Ninth Circuit's key holding, in my mind, was the first -- that the reason for imposing the records requirement was essentially regulatory, not criminal. See Slip Op. 10 - 15. I think that the reasoning proffered in the opinion certainly does not compel its holding on the issue and that reasonable minds might reason and conclude differently. The legislative history is flavored with a criminal law purpose for the FBAR requirement and the resulting supporting records requirement. It is, of course, true that, as in many such areas, colorable regulatory reasons can overlap. 

6. At the end of the day, it just seems to me that, if the holding is found persuasive in other cases and gains momentum among the circuits, there will be no end to the Government's ability to impose a record keeping and production requirement by regulation. I am reminded of Justice Frankfurter's concerns regarding the "public record" prong of the conditions for applying the Required Records Doctrine (a concern which, I think, infuses all conditions): "Subtle question-begging is nevertheless question-begging. Thus: records required to be kept by law are public records; public records are non-privileged; required records are non-privileged. If records merely because required to be kept by law ipso facto become public records [and therefore fall outside the scope of the privilege], we are indeed living in glass houses." Shapiro v. United States, 335 U.S. 1, 51 (1948) (the Shapiro majority decision is the principal case in the area, but just because Justice Frankfurter's concerns are stated in a dissent does not make them any the less valid).  At the end of the day, although I often disagree with Justice Thomas's views in the limited data set of Supreme Court cases that I watch, I think he nailed the Fifth Amendment analysis in his concurring opinion (joined by Justice Scalia) in Hubbell summarizecd in his opening:  "A substantial body of evidence suggests that the Fifth Amendment privilege protects against the compelled production not just of incriminating testimony, but of any incriminating evidence. In a future case, I would be willing to reconsider the scope and meaning of the Self-Incrimination Clause."  Hubbell, p. 49.  Projecting that logic, there would seem to be no room for the Required Records Doctrine.


  1. I have carefully read this decision. To say that it "strains" the Required Record Exception to the Fifth Amendment Right is putting it very mildly.

    I join Justices Scalia and Thomas in expressing the view that: "A substantial body of evidence suggests that the Fifth Amendment privilege protects against the compelled production not just of incriminating testimony, but of any incriminating evidence. In a future case, I would be willing to reconsider the scope and meaning of the Self-Incrimination Clause." Hubbell. United States v Hubbhell, 530 US at p. 49.

    Using the foregoing logic, there simply is no room for the Required Records Doctrine.

    The instant decision alludes to the US Supreme Court's 1990 decision in Bouknight. My question is: Would the act of production, contents of the underlying records and derivative evidence be admissible against the witness at a future criminal trial given that the witness was compelled to create, keep and produce them as an integral part of a regulatory process?

    Giving due respect to the notion that the 9th Circuit has now characterized the mere act of having an offshore account as voluntarily entering into some kind of regulated activity, it seems to me that the government cannot have it both ways. If there is compulsion to create, keep and produce records for regulatory purposes, such records and derivative evidence should be excluded from evidence at a future criminal trial.

    At a minimum, modern substantive due process jurisprudence would warrant that the government "warn" individuals that opening, maintaining or having any signature authority over a foreign financial account opens the door to being regulated to such as an extreme that they are waiving their Fifth Amendment right.

    Jack, what do you think?

  2. I find this opinion to be problematical. (I will be polite -- I practice in the 9th Circuit.) And I agree with you that the logic used in the opinion, if extended to other situations, will eviscerate the ability of individuals to claim a Fifth Amendment privilege based on the "act of production." The panel's failure to cite to Hubbell is very surprising.

    And what if responding to the subpoena could furnish a link in the chain of evidence needed to prove an obstruction of justice charge? If the person subpoenaed destroyed some -- but not all-- of the evidence sought by the subpoena, does the fact that the destroyed documents are covered by the "required records" doctrine mean that the person subpoenaed can not claim a Fifth Amendment privilege with respect to the act of production in response to the subpoena?

    Also, I've never been comfortable with the notion that, just because something is a "foregone conclusion", the Fifth Amendment just vanishes into the ether. If there are 20 witnesses who will testify that that they saw the defendant kill someone, plus a videotape which ostensibly shows the defendant committing the killing, that does not allow the government to compel a the defendant to get on the stand to testify.

    If the government wants something from the recipient of the subpoena that is "testimonial" in any way, they should be required to grant use immunity with respect to whatever is "testimonial." The government can use whatever else it has to support its "foregone conclusion" argument at trial.


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